Sources said the Cabinet committee approved a rail coach factory at Rae Bareilly at an estimated cost of Rs 1,700 crore and a diesel locomotive manufacturing facility at Saran at an estimated cost of over Rs 2,000 crore.

A formal announcement in this regard is expected over the next few days. Rae Bareilly is Congress president Sonia Gandhi's constituency; Saran comes under Railway Minister Lalu Prasad Yadav's parliamentary constituency.

Yadav had earlier told a parliamentary panel that the factories would meet the increasing demand for more engines and coaches and also generate employment in these areas.

Finance minister P Chidambaram told reporters on Thursday that the announcement on decisions vis-à-vis the railways would be made later, possibly in Parliament.

He, however, announced the CCEA decision to augment the corpus fund of the Maulana Azad Education Foundation from Rs 100 crore to Rs 200 crore. Chidambaram said the Cabinet had also cleared a one-time bailout package for Seamen's Provident Fund to make up for Rs 92.78 crore that was misappropriated earlier and legislative measures to distance the government from this and other similar provident funds.

An amendment to be moved in the Seamen's Provident Fund Act 1966 in the ongoing session of Parliament will make the trustees responsible for the fund. He also indicated that a decision on the management of pension funds had not been taken.